CH 17 Quiz

Under the Taxpayer Relief Act of 1997, a single filer can qualify up to how much in tax exemptions...?

$250,00 dollars

Which of the following types of depreciation is relevant to real estate...?

Economic depreciation

Which of the following is considered a depreciable asset...?

buildings

Earnings an individual derives from a rental property in which he or she is not actively involved is known as...?

passive activity income

Which of the following is NOT considered a depreciable asset...?

personal use assets

The depreciable basis for a single family residence is $225,000. Using the straight-line depreciation method, what is the allowable annual depreciation for the property...?

$8,181.82

Under the Taxpayer Relief Act of 1997, a buyer can use up to how much of their IRA fund towards a down payment, without being subject to an early withdrawal penalty...?

10000

This section of the Internal Revenue Code (IRC) allows for an exclusion on capital gains tax at the sale of a primary residence...?

121

The Taxpayer Relief Act of 1997 allowed homeowners to realize a $250,000 - $500,000 tax exemption at the sale of their property. However, the homeowner must have lived in the residence for how many years, within the past 5 years...?

2 years

Using the straight-line depreciation method, income producing residential properties depreciate over how many years...?

275

Using the straight-line depreciation method, commercial property is depreciated over how many years...?

39

Using the straight-line depreciation method, income producing, non-residential properties depreciate over how many years...?

39

When executing a 1031 Exchange, how many days does an owner have to identify a new property...?

45 days

The depreciable basis of a commercial property is $525,000. Using the straight-line method, what is the allowable annual depreciation for the property...?

=$13,461.54 ($525,000/39 years) (commercial property depreciates by 39 years)

If the depreciable basis for a single family residence is $550,000, what is the allowable annual depreciation using the straight-line depreciation method...?

=$20,000 ($500,000/27.5) (residential property depreciates over 27.5 years)

In order to qualify for a 1031 exchange, a newly purchased property must be located where...?

Anywhere in the United States

According to the IRS, which of the following property types is NOT considered a permitted deduction on one's tax return...?

Income producing properties

This program provided a dollar-for-dollar reduction in federal taxes for developers who built rental housing that serves low income households....?

LIHC

When executing a 1031 exchange, the tax code requires an owner to purchase which of the following...?

Like-kind properties

Which of the following is NOT a requirement for homeowners when deducting mortgage interest on their tax returns...?

Must have a 30-year amortization loan

The formula for determining realized gains is equal to...?

Net Sales Price - Adjusted Basis

Which of the following is NOT considered operations income...?

Net proceeds from sale of property

Which of the following is the correct formula for determining the Adjusted Basis on a property...?

Original Purchase Price + Capital Improvements - Depreciation

When depreciation is subtracted from net income to determine a property's taxable income, the depreciation is considered a...?

Tax deduction

This type of depreciation is relevant to real estate...?

Tax depreciation

The original cost of a property minus depreciation and sales of portions thereof, plus allowable additions such as capital improvements and certain carrying costs and assessments, is referred to as...?

adjusted basis

A monetary gain resulting from the increase in the market value of an investment, excluding additions of capital, is known as...?

appreciation

A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out is known as...?

basis

The periodic expensing of an asset over the property's theoretical economic life is referred to as what...?

depreciation

When calculating the amount of taxes to be paid on a property, the tax rate is multiplied by this number...?

taxable income